There's a tiny ray of sunshine peaking though the storm clouds.
If we look at NAR's report of the actual number of closed residential transactions (single family, condo and co-op) in the U.S. in September (as opposed to the seasonally adjusted numbers), there is a bit of good news. There were 7.8% more real buyers (closed transactions) in September of this year than last.
If your immediate reaction is, "Not in my market!" that may be because the part of the country you are in and the market segment that you target make a difference.
The geographic breakdown looks like this for September 2008:
While the increase in sales is good news, don't get too excited. The primary driver of the uptick is the 42.9% increase in sales in the West, primarily California. Here are some other facts to consider: It is estimated that 35% to 40% of the nation's September sales were distress sales, either short sales or foreclosure sales. This is reflected in the decline in median home prices across all geographic areas. The two regions with positive sales growth show the largest price declines. Factor in a current resale inventory of 4,266,000 homes and you can see that we are not out of the woods yet.
What does this mean to your real estate practice?
If you aren't targeting distressed sellers, short sales and foreclosures (yes, they exist in the luxury segment), you are missing an active market niche. If this niche is not your cup of tea, there are still non-distress deals being done in the upper-tier (just fewer of them than previously!). This mean you must work harder and smarter to capture the business. What follows are a few reminders to help you define your on-going strategy.
The wealthy are shopping Online
Upper-tier buyers are avid users of the Internet. In fact, as income goes up, so do the number of hours spent Online. The affluent are researching homes and agents Online. You must be sure your Web presence is strong and effective and that you are maximizing the value of the Web with your property promotion.
They want to work with The Expert
An equally important strategy is to position or brand yourself as the expert in the upper tier. As I describe it in training, you must position yourself in the minds of the affluent as unique and better able to meet their needs. This means you must be truly knowledgeable. Remember that the affluent are predominately business owners, self employed professionals and high level corproate executives. They are bottom- line oriented and want to know the specific market statistics. They understand that market averages across all price ranges aren't relevant , except to identify general trends. They expect you to know what's happening within price narrow bands within the luxury market. Make sure you do. This will immediately differentiate you from the competition.
Your listings must rank at the top of the list
In a strong market, most everything sells. In a slow market, only the very best properties -- based on price, condition, and staging -- will sell in a reasonable time and for a good price. This means you must work to be sure you have one of the top one or two homes in your price point. Work with your sellers to move your listings to the top of the value list. Yes, I know this is a challenge, but it is key to success.
Your marketing skills must be top notch
Have you analyzed what is unique about your listing? What are the key selling appeals for your listing? Do you understand the concept that every home has its own story and that it is your job to tell it in a compelling way? Are you using the positive power of a great headline (or defaulting to the property address)? Are you writing good long copy or taking the lazy way out with bullet points? Do your property photographs measure up? Are you targeting your marketing to the most likely buyer category for your listing? The list could go on, but you get the idea. Now's the time to focus on honing your marketing skills and implementing a sophisticated marketing plan. If your copy and your plan are generic and can shift from property to propery "as is," you're on the wrong track.
A slow market represents an opportunity
Business overall is down, but if you focus on branding yourself as a luxury expert, truly become an expert, build a strong Web presence for yourself and your property listings, and understand how to merchandise and market your properties effectively, you can grow your market share. With a bigger market share, you are positioned to vastly expand your business when the market turns up again.
Note: The Institute is working to help our members cash in on this opportunity with advanced training and networking opportunities like our annual Leaders in Luxury event and with added value marketing, including FREE Online property listings on The Wall Street Journal's website. See the membership section at www.LuxuryHomeMarketing.com, call or email us for details.